A British Electricity Market A British Electricity Market 29 June 2004 29/06/04
A British Electricity Market AGENDA � Ofgem & DTI introductions � Opportunities for GB trading � Implications of BETTA � Overview of Transition � Transition activities – NGT – ELEXON � Next steps and closing remarks 29/06/04
A British Electricity Market A British Electricity Market 29 June 2004 Alistair Buchanan Chief Executive Ofgem 29/06/04
A British Electricity Market The BETTA Proposals � Joint Ofgem/DTI initiative � Will apply to the whole of Great Britain comprising: – GB trading based on England & Wales arrangements – GB transmission access for all parties – Split of transmission functions between system operation and transmission ownership 29/06/04
A British Electricity Market Background � Scottish wholesale arrangements set up at privatisation � Different to England & Wales – no competitive market – reliance on administered arrangements – vertically integrated companies remained in being � Restriction of trade through interconnector arrangements � No significant change in Scotland since privatisation 29/06/04
A British Electricity Market Scottish Electricity Industry Generation 10,000 MW Max Demand 6,000 MW Excess Capacity 4,000 MW W Plant margin 66% M 0 0 Coylton 2 NIE 500 MW 2 NGC Belfas t 29/06/04
A British Electricity Market The BETTA Proposals � Consultation responses show strong support including Scottish companies � Design phase nearing completion � Implementation phase under way 29/06/04
A British Electricity Market The BETTA Proposals � Energy Bill – enables legal environment in which BETTA proposals will be implemented � Assuming Royal Assent end July – Legal framework for implementation in place 1 September 2004 – target date for introduction 1 April 2005 29/06/04
A British Electricity Market The BETTA Proposals � It’s real � It’s happening � Purpose of today to outline opportunities, and � tell parties what they need to do to prepare 29/06/04
A British Electricity Market BETTA – are you ready? Maria Bazell Head of BETTA & Electricity Market Team 29/06/04
A British Electricity Market Government Energy Objectives � Promote competitive markets � Reduce carbon dioxide emissions � Maintain reliability of energy supplies � Adequate and affordable heating for all 29/06/04
A British Electricity Market BETTA – Energy Bill � Completed passage through the House of Lords � Just completed Committee in Commons � Third Reading/Report expected around 12 July � Still on track for Royal Assent before summer recess 29/06/04
A British Electricity Market Go Active � Bill powers to be commenced in August � Go-active 1 September � By then – Enduring Codes and licences – Transitional text in Codes and licences – Detailed transition plan – 3 months ahead – High-level plan for remainder of transition period 29/06/04
A British Electricity Market Countdown begins! � September – only two months away � April 2005 – less than a year to go � Objective of today – to ensure everyone here knows what will happen during transition to BETTA 29/06/04
A British Electricity Market A British Electricity Market 29 June 2004 Opportunities Steve Smith Managing Director Markets Ofgem 29/06/04
A British Electricity Market Key Expected Outcomes � More competition in Scotland – in generation and supply � More efficient GB traded markets � More co-ordinated investment in GB transmission networks 29/06/04
A British Electricity Market Opportunities (Customers) � Domestic customers in Scotland benefit: – DTI RIA estimated £13 per customer in Scotland, – help to fuel poor and those on lower incomes, – competition and choice for all GB consumers � Renewables benefit through better access to market and spreading of the necessary transmission investment across GB � Industry benefits through competitive prices � Market participants benefit through minimum change approach, which minimises costs 29/06/04
A British Electricity Market Opportunities (Suppliers) � GB market will enable: – One set of rules supplying customers across GB – Barriers to entry in Scotland removed e.g. removal of administered interconnector arrangements – Real opportunities for Suppliers – Change in risk profile 29/06/04
A British Electricity Market Opportunities (Generators) � Open and fair access to GB transmission system – common arrangements for access to transmission system – unified pricing methodology – recovery of GB transmission costs from GB charging base – provision of visible non-discriminatory access through creation of independent GB system operator � Interconnector becomes another part of the transmission system � Transmission prices will change, but: – Scottish generators will no longer have to pay separate charges for use of interconnector – Access to GB market 29/06/04
A British Electricity Market Opportunities (Renewables) Current arrangements stifle development in Scotland � GB market will enable � – Essential investment in transmission networks – Access to liquid GB market – Competition for output of renewable generation 29/06/04
A British Electricity Market Opportunities (Summary) � Good for all classes of customers � Co-ordination of investment in transmission � Greater access to GB market So how do parties become involved and how do we transfer to the new arrangements? 29/06/04
A British Electricity Market A British Electricity Market 29 June 2004 Implications of BETTA Simon Street BETTA Project Ofgem 29/06/04
A British Electricity Market Electricity Act Current Legal (as amended) Framework Supply Licences Generation Distribution England Transmission Scotland & Wales Settlement Agreement for BSC Scotland Framework Trading CUSC Agreement Code Framework NGT’s Agreement Scottish Grid Code Grid Code Bilateral Contracts 29/06/04
A British Electricity Market Electricity Act Enduring Legal (further amended) Framework Supply Licences Generation Distribution Transmission New SO- TO Code BSC Framework Agreement Framework CUSC Agreement Framework Grid Code Agreement Bilateral Contracts 29/06/04
A British Electricity Market User Facing Codes � Balancing and Settlement Code – Trading of wholesale electricity – Enforced contractually by Framework Agreement Connection and Use of System Code � – Terms for access to and use of the transmission system – Enforced contractually by a Framework Agreement – Requires compliance with the Grid Code Grid Code � – Specifies technical parameters by connectees – Specifies data communication requirements 29/06/04
A British Electricity Market Implications of BETTA (CUSC) � England & Wales CUSC used as basis for GB document � Near final version published 30 April 2004 � Differences from England & Wales only where necessary � Establishment of GB Amendments Panel � Secretary of State will designate changes to existing agreement to give GB effect 29/06/04
A British Electricity Market Implications of BETTA (CUSC) � England & Wales CUSC becomes the GB CUSC – this is the same agreement – only it’s scope will have changed � All generation, distribution and supply licensees obliged to accede to framework agreement (if not already done so) � All generation, distribution and supply licensees obliged to comply with the GB CUSC 29/06/04
A British Electricity Market Implications of BETTA (Connections) � All parties connected to the transmission system will have agreements with the GB system operator: – connection agreement – mandatory services agreements � Parties may require Interface Agreements with their local transmission licensee � Based on “CUSC form” agreements 29/06/04
A British Electricity Market Implications of BETTA (Connections) � Access to GB Transmission System – removal of constraint of access to interconnector – increase in demand for renewables connection in Scotland � NGT published consultation on 21 May 2004 � NGT will publish a technical report at the end of June � Further information NGT 29/06/04
A British Electricity Market Implications of BETTA (BSC) � England & Wales BSC used as the basis for GB document � Near final version published 30 April 2004 � Key differences: – recognise metering registered under SAS – recognise two Scottish GSP Groups – recognise Scottish non-half-hourly metering arrangements – ELEXON as GB BSC company � Establishment of GB BSC Panel 29/06/04
A British Electricity Market Implications of BETTA (BSC) � All generation, distribution and supply licensees obliged to accede to BSC framework agreement (if not already done so) � All generation, distribution and supply licensees obliged to comply with the GB BSC � Changes to the existing BSC to be designated by the Secretary of State � The BSC continues; its scope becomes GB 29/06/04
A British Electricity Market Implications of BETTA (BSC) � BSC parties obliged to undertake registration activities in respect of metering in Scotland � All transactions settled under GB BSC � Scottish GSP groups to be added to settlement � Further information from ELEXON 29/06/04
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